DGAP-News: Kontron AG

DGAP-News: Kontron announces Q3 results in line with the revised expectations for the full year 2016

DGAP-News: Kontron AG / Key word(s): 9-month figures Kontron announces Q3 results in line with the revised expectations for the full year 2016

27.10.2016 / 07:00 The issuer is solely responsible for the content of this announcement.

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- Revenues EUR 89.5 million (down 21.1 % on 3Q15: EUR 113.4 million)

- Order intake EUR 79.0 million (down 29.0 % on 3Q15: EUR 111.2 million)

- Order backlog EUR 261.7 million (down 18.4 % on 3Q15: EUR 320.7 million)

- Gross margin still suffering from weak revenues: 20.6 % (26.7 % in 3Q15)

- EBIT net of restructuring cost and non-recurring costs comes to EUR -6.7 million (3Q15: EUR 5.1 million)

- New restructuring program commenced

Augsburg, October 27, 2016 - Kontron AG, a leading global provider of Embedded Computer Technology (ECT), reports results for the third quarter that, as expected, are below the prior year and in line with the expectations for the full year 2016 after the revision of the guidance in July 2016.

Third quarter on a par with the first two quarters

At EUR 89.5 million, revenues are on a par with the first two quarters of 2016 and 21.1 % below the third quarter of 2015, when revenues came to EUR 113.4 million. Likewise, the order intake of EUR 79.0 million was 29.0 % down on the same quarter of the prior year, when it came to EUR 111.2 million.

The order backlog mirrored this development, coming to EUR 261.7 million as of September 30, 2016 (2015: EUR 320.7 million). The same holds true for EBIT and the gross margin: EBIT, adjusted for restructuring cost and non- recurring costs, was negative at EUR 6.7 million, compared to a positive figure of EUR 5.1 million in the third quarter of 2015. The gross margin of 20.6 % is approximately 6.1 percentage points below the level of the prior year of 26.7 %.

Weak revenues continued to be recorded in all three business units: Industrial saw a decline of EUR 8.8 million, down 16.2 % on the same quarter last year. Within this business unit, Industrial Automation recorded a rise in revenue of EUR 1.6 million, or 6.9 %. Infotainment and Medical recorded a combined fall of EUR 10.4 million, or 32.1 % compared to the prior year. The decline in revenues generated by the Avionics/ Transportation/Defense business unit of EUR 11.2 million, or 34.9 %, was disappointing. However, some of this decline is explained by a shift in revenue recognition to later periods. Within the business unit, the Transportation segment recorded a decrease of EUR 6.7 million and the Defense segment a decrease of EUR 6.1 million. The Avionics segment improved slightly by EUR 1.8 million. In the business unit Communication revenues also contracted, as expected, and were down by EUR 3.9 million, or 14.4 %, in comparison to the same period of the prior year.

Management Board working on a new restructuring plan

The Management Board of Kontron AG is working on a new restructuring plan to return Kontron to profitable revenue growth by making the most of the company's existing potential.

"We are already focusing on implementing the first measures," says Sten Daugaard, CEO of Kontron AG. "One of the objectives of the plan is to create a high-performance product portfolio and establish an optimized technology roadmap that will allow the company to better address future markets and offer our customers even better products and services."

"We are planning to implement all the points of the plan within twelve months, which is ambitious but nevertheless feasible," says Dr. Thomas Riegler, CFO of Kontron AG. "Kontron has numerous strengths which we must exploit and nurture, and the ECT market itself continues to offer us promising growth opportunities."

Dr. Thomas Riegler will remain at the helm as member of the management board to guide Kontron through the restructuring process

Dr. Thomas Riegler, who has been in charge of Finance at Kontron AG since March 2016 and was appointed to the Management Board on July 25, 2016, has agreed to remain in office. Mr. Frank Gumbinger decided not to join the Management Board of Kontron effective January 1, 2017 for personal reasons.

"It is with great regret that the Supervisory Board and Management Board acknowledge Mr. Gumbinger's decision. We wish him all the best for the future and his professional career," says Rainer Erlat, Chairman of the Supervisory Board of Kontron AG. "At the same time we are delighted to have Dr. Thomas Riegler, a very experienced and competent member of the management board, to accompany the restructuring efforts over the coming months and that with this appointment we can ensure continuity within the company."

Guidance for 2016

Kontron expects revenues in the second half of 2016 to remain comparable to the first six months. However, both the adjusted EBIT margin and the gross margin are likely to be lower in the second half of 2016 than in the first six months.

Key performance indicators for the third quarter of 2016

Q3 2016 Q3 2015 ? Order intake EUR m 79.0 111.2 - 29.0 % Order backlog EUR m 261.7 320.7 - 18.4 % Revenues EUR m 89.5 113.4 - 21.1 % Book-to-bill ratio 0.88 0.98 Gross margin % 20.6 26.7 - 6.1 ppt EBIT net of EUR m - 6.7 5.1 - 11.8 restructuring cost and non-recurring costs EBIT (reported) EUR m - 6.7 3.5 - 10.2 Cash flow from EUR m 7.5 - 1.2 operating activities



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About Kontron: Kontron, a global leader in embedded computing technology and a pioneer in secure IoT platform solutions, provides a combined portfolio of hardware, middleware and services. With its leading-edge standard products and solution ready platforms, Kontron enables new technologies and applications across multiple industries. As a result, customers benefit from accelerated time-to-market, reduced total cost of ownership, product longevity and the best overall application with the highest reliability in embedded technology. Kontron is a listed company. Its shares are traded in the Prime Standard segment of the Frankfurt Stock Exchange and on other exchanges under the symbol "KBC". For more information, please visit: www.kontron.com

For more information:

Alexandra Habekost Head of Investor Relations Kontron AG Tel: +49 (0) 821 4086 114 Alexandra.Habekost@kontron.com

Chari Lazaridis Head of Global Corporate Communications Kontron AG Tel: +49 (0) 821 4086 484 Chari.Lazaridis@kontron.com

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27.10.2016 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement.

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Language: English Company: Kontron AG Lise-Meitner-Straße 3-5 86156 Augsburg Germany Phone: 00498214086114 Fax: 00498214086122 E-mail: Alexandra.Habekost@kontron.com Internet: www.kontron.com ISIN: DE0006053952 WKN: 605395 Listed: Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange End of News DGAP News Service ---------------------------------------------------------------------------

514999 27.10.2016